TORONTO – North American equity markets were boosted by a bipartisan deal on U.S. infrastructure spending and comments from the Federal Reserve on interest rates.

TORONTO – North American equity markets were boosted by a bipartisan deal on U.S. infrastructure spending and comments from the Federal Reserve on interest rates.

“I think the Fed is really driving the bus right now when it talks about inflationary pressures,” said Allan Small, senior investment adviser at IA Private Wealth.

Small said Fed officials had allayed market fears by reversing some of last week’s comments on two interest rate hikes by repeating that they felt the rise in inflation was only temporary.

“When there are people talking about an interest rate hike before 2023, I think the market is scared,” he said in an interview.

The confirmation Thursday that US President Joe Biden has reached an eight-year US $ 1.2 trillion infrastructure package deal also bolstered positive investor sentiment.

“I think this just spurs a number of good quality names and it’s an anticipation of further growth, with companies having the opportunity to expand further as the government spends money on infrastructure. “, did he declare.

The S & P / TSX Composite Index closed up 50.73 points at 20,215.12.

In New York, the Dow Jones Industrial Average was up 322.58 points to 34,196.82 The S&P 500 Index was up 24.65 points to a record 4,266.49, while the composite Nasdaq was up 97.98 points to a record 14,369.71.

Small said he believes positive economic data in Canada, such as higher Canadian wholesale trade figures and Export Development Canada’s Trade Confidence Index reaching its highest level in more than 20 years, had no impact on market gains in Canada.

And in the United States, the country’s jobless claims, which declined less than expected, had minimal impact.

“I don’t think it’s a data driven rally today, I think it’s a Fed driven rally and I think it’s an administrative rally meaning what comes out of Washington.”

However, he said the global economic reopening underpinned the rise in stock markets.

Seven of the TSX’s top 11 sectors were up, including healthcare, energy and materials.

Healthcare soared 3.4 percent as shares of Canopy Growth Corp. gained 5.2 percent.

Energy rose as crude oil prices edged up, pushing up 2.7% for PrairieSky Royalty Ltd.

The August crude oil contract rose 22 cents to US $ 73.30 per barrel and the August natural gas contract rose 8.5 cents to nearly US $ 3.44 per mmBTU.

The Canadian dollar was trading at 81.20 US cents against 81.39 US cents on Wednesday.

Materials were slightly higher despite a drop in gold and copper prices that resulted in a 1.9% drop by Equinox Gold Corp. and a 1.7% decline by Kinross Gold Corp.

The August gold contract was down US $ 6.70 to US $ 1,776.70 an ounce and the July copper contract was down two cents to US $ 4.31 per pound .

The heavyweight financial sector, including stocks of some major banks, was on the rise, in anticipation of favorable stress testing results in the United States after markets closed, which would allow U.S. banks to increase their dividends and redeem their shares.

“We tend to move in general in sympathy with the United States,” Small said, noting that Canada’s financial regulator will determine when domestic banks can increase payments.

He said Canada’s main stock index would accelerate if commodities strengthen again, especially if crude oil hits US $ 100 a barrel, as some analysts have suggested.

“You would see the bank stocks go up, you would see our dollar go up and the TSX would probably be, you know, 21,000 or something,” he said. “That’s the kind of nation we are. We do well in this type of environment and it hasn’t been this type of environment for a long, long time.”

This report by The Canadian Press was first published on June 24, 2021.

Companies in this story: (TSX: PSK, TSX: EQX, TSX: K, TSX: WEED, TSX: GSPTSE, TSX: CADUSD = X)

Ross Marowits, The Canadian Press



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